How it works
How this tool works.
The 50% rule is a shortcut investors use to screen deals before digging into real numbers. It assumes that, over time, operating expenses — everything but the mortgage — eat about half of gross rent. That single assumption turns a listing into a rough cash-flow read in seconds.
Enter the monthly rent and your mortgage payment, and this calculator applies the rule for you: half of rent set aside for expenses, the rest weighed against the loan. Treat the result as a first-pass filter, not a substitute for itemized costs.
Enter the monthly gross rent for the unit.
Enter the monthly mortgage payment — principal and interest only.
The tool sets estimated operating expenses at 50% of rent, then subtracts the mortgage to estimate monthly cash flow.
Use it to quickly rule deals in or out, then confirm the winners with real, itemized numbers.
Make the result useful
Fifty-percent-rule screening
Gross rent is the recurring income used for the quick expense placeholder.
The 50% factor is a screening assumption for operating expenses before debt.
Mortgage debt service is intentionally excluded from the placeholder.
Actual expense history should replace the shortcut whenever available.
The assumptions that move this result
Gross rent
Monthly or annual rent on a consistent basis.
Rule factor
50% operating-expense placeholder.
Debt service
Separate loan cost not in the formula.
Period
Matching period for rent and expense estimate.
operating-expense placeholder = gross rent × 50%
Use the output as a documented scenario result, not a guarantee.
Read the number in context
Worked scenario
Scenario: $3,000 rent leaves $1,500 for operating expenses before debt.
Edge case
Edge case: a new property may spend far less now but still need reserves.
Not a property-specific expense forecast.
Before you act
• Replace with itemized expenses.
• Keep debt service separate.
• Test repairs and vacancy.
Worked formula
operating-expense placeholder = gross rent × 50%
Is this a forecast?
No. It calculates the assumptions you enter.
Can it replace professional review?
No. Use current records and qualified advice.
What should I save?
Keep the assumptions and source records used for the decision.